[Congressional Record Volume 140, Number 29 (Wednesday, March 16, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: March 16, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
WHITEWATER AND MADISON
Mr. D'AMATO. Mr. President, there has been a lot said, and I think a
lot more to be learned, on the situation of Whitewater and Madison. I
look today and find out something that I suspected may have been taking
place, and that suspicion today is given greater fuel by the article
that I read today in the New York Times, March 16, 1994, by Stephen
Labaton. I am going to read part of it, just part of it:
Clinton administration officials last year rejected a
recommendation by a senior regulator to open a Treasury
Department investigation into the failed savings and loan
association owned by President Clinton's former partner in
the Whitewater venture, Government and Congressional offices
said today.
The request to open a broad investigation of the savings
institution was made by Brian McCormally, the top enforcement
official for the Midwest Division of the Office of Thrift
Supervision, which is part of the Treasury Department.
The article goes on--I am not going to read it verbatim--to say:
The two agencies have overlapping jurisdictions--
That is, the RTC, and the OTS, have overlapping jurisdiction.
and often conduct separate investigations into failed savings
associations. But the Thrift Supervision Office has a larger
staff and greater enforcement powers and has handled many of
the most significant investigations of savings associations
and their lawyers and accountants.
Government officials and Congressional aides said the
request was turned down last fall by Mr. McCormally's
supervisors in Washington, Carolyn Lieberman, acting counsel
to the thrift supervision office, and Jonathan Flechter,
acting director of the office. They report to senior
political appointees at the Treasury Department, and rarely
make major decisions without high-level consultations.
William E. Fulwider, the spokesman for the Office of Thrift
Supervision, declined to discuss the case or to say whether
its officials had consulted the Treasury Department.
As enforcement director for the Midwestern region of the
Office of Thrift Supervision, Mr. McCormally oversees
enforcement efforts against savings associations in 23
states, including Arkansas. He is best known as the Federal
regulator who supervised the inquiry into Neil Bush, a son of
former President George Bush, who settled charges of conflict
of interest over his role in the Silverado Banking, savings
and Loan Association in Denver.
Officials said Mr. McCormally asked his superiors in
Washington last fall for permission to look into the collapse
of Madison. It is unclear whether he made the request before
or after the meetings between Treasury and White House
officials concerning the Resolution Trust Corporation's
inquiry.
The Office of Thrift Supervision regulates the savings
industry, and the trust corporation handles savings
institutions that have been seized and bailed out by the
Government. The thrift supervision office, created in 1989,
also has many records from its predecessor agency, the
Federal Home Loan Bank Board, and officials said it had many
of Madison's files from the 1980's.
Mr. President, I asked this question yesterday during what was
supposed to be a talk show. But it was like putting--in the old
gladiator days--people in the midst of an arena. It was an arena
setting. I was one of the participants.
Today, in America, the people have a right to take their opinions and
make them known.
If George Bush were President, and the matter as it relates to
Madison Guarantee concerned him, the same situation, and he were here,
would the Congress of the United States say that it was not important
to hold hearings? We held hearings on the House side as it relates to
George Bush's son, Neil. The Banking Committee chairman, Mr. Gonzalez,
had no problems. And, yes, there were Federal investigations
undertaken.
None of us suggest that we just go forth willy-nilly with hearings
without giving the special counsel the opportunity to interview those
witnesses first, as we suggested with him. And we said that with
something that important to him we would not grant immunity to
witnesses, that we would do it in the manner in which it would be less
detrimental to his case.
But the facts have dribbled out, and are dribbling out. Most recently
we have these alarming allegations in the New York Times. Mr. Fiechter
was before our committee. I guess it would have taken a great act of
courage on his part to indicate about this because he knew that we were
concerned. We did not ask him the precise question as to whether or not
he ever consulted with people as it related to the Treasury Department.
But he could have raised it as it related to the White House.
But this situation obviously cries out. We now have one of the
independent regulators that came in and had meetings which were, at the
very least, inappropriate. I am talking about the RTC. Then when we
find out that the OTS, and the same enforcement official who handled
President Bush's son's matter, was not permitted to go forward. I
suggest to you that Congress has an absolute total responsibility to
find out why. That is not the province of the special prosecutor; his
mandate relates to criminal prosecutions. Our role is to see whether or
not there is an abuse of power.
When we have this kind of information coming forward--and let us
understand, these people are not going to come forward on their own.
They need the protection of the Congress and Congressional hearings.
Those people, otherwise, would rightfully feel that they would suffer
the wrath of those in high positions.
The so-called claims of paralysis that may or may not be taking place
in Government--will be self-induced. You cannot say we cannot go
forward, because people are asking questions when they have a
legitimate reason, and want answers to these questions. I say to those
who say, ``Why are you asking these questions?'' Because it is our
responsibility to do so. Ours is not to paralyze. Ours is not to bring
someone down, but it is to get the facts.
I want to tell you something. An abuse of power in this country is
serious. And if there are those in high political positions, whether
they be in the Treasury or the White House or any other place, or
attempting to stifle the truth and abusing power in that manner, is
serious. The American people have a right to know. That does not fall
under the prerogatives of the special counsel. We cannot delegate those
away. They are our prerogatives.
No amount of name calling is going to stop this Senator from going
forth and asking for the facts. That is what we are asking for; a
hearing to get the facts.
I would hope that our Senate leaders could agree on the format to do
this in a constructive way so that the business of the people can go
forward. This Senator has not attempted to obstruct it. I have made
brief appearances on this floor. If you were to count all of the time
that I have taken and all of my appearances, it does not amount to very
much over the months.
If I had not made these requests for the statutorily required RTC
Oversight Board hearing, and had the chairman of the Banking Committee,
Senator Riegle, not agreed as he did, we may have never learned of the
initial meeting and the subsequent meetings that took place that were,
at the very least, inappropriate.
Now, when we hear some of the same Treasury people who went to those
meetings about the RTC, to give a so-called heads up to the
administration, to the White House, may be among the same people who
denied and stopped the OTS from going forward and looking into this
matter, I would say to you that there is no other course than to have
congressional hearings. We should hold hearings in an orderly way and
in a proper manner; and, that by denying these hearings it leads people
to believe that there is something far greater and more significant.
Maybe it leads people to say, ``What are you hiding, and why are you
hiding?''
That is the inescapable conclusion that, I believe more and more
American people will come to. It is one that I have begun to come to.
It is not one that I initially started out with. I simply wanted some
facts and information, but I could not get those facts and information.
Finally, we got it in the most terse forms, and only, again, because
Senator Riegle and his staff called up and said, ``My gosh, why don't
you give it to us?'' Eight Senators sent a letter asking to find out
when the statute of limitations runs. ``Are you going to basically use
the same procedures that have been used in other cases to protect
whatever the Government's claim may or may not be?''
We were stonewalled--stonewalled.
Then of course came the days when I came down to the floor and
presented the calendar, and talked about the statute running out. We
got at least an extension of that statute of limitations through the
efforts of Senator Metzenbaum, myself and the rest of my colleagues.
These are the questions that people have a right to have answered. We
should not be met by this barrage, attack, claims that ``you are trying
to hurt the administration, trying to take them down, trying to damage
some program, whether it is their health program or another one.'' That
is not the case. That is absolutely not the case. But that is the cry,
and that cry is a false canard.
Let me suggest that you go back to the Watergate days and look at the
testimony of John Dean. John Dean said that the administration, while
they talked about cooperation, said they would attack those in the
Congress as it relates to their conduct of the hearings, saying that
these are politically inspired. There is beginning to be a parallel
here: Shredding of documents, missing documents, the manner in which
papers are taken out of Mr. Foster's office after his death, in the
manner in which the Park Police and FBI were not permitted to do their
jobs, the concealment in such a manner of these basic facts, raises
questions. It seems to me that the very people who cry that we are
attempting to obstruct them from pursuing their program, are as a
result of either their own actions or the actions of those close to
them, creating the situations that lead people to say, ``Why are you
doing this?'' All we want are the facts.
I want to know why, if what this article alleges is accurate, it was
that Mr. McCormally was refused permission, and who it was that made
that decision. Did they consult with Treasury? Which officials in
Treasury? Was it Mr. Altman? Did Mr. Altman advise others as it relates
to this? Did he speak to the White House? Did the counsel, Joan Hanson,
who, three times before, went to the White House? And when counsel to
the Treasury Department undertakes that kind of mission, there is no
excuse. That is a person steeped in the law. Was she consulted on this?
Did she go to the White House and speak to others about this? These are
questions that flow from just a cursory review of this article.
Mr. President, I ask unanimous consent that the full article be
printed in the Record in its entirety.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the New York Times, Mar. 16, 1994]
Treasury Official Urged 2d Inquiry--Regulator's Request for Look at
Failed S&L Is Said To Have Been Rejected
(By Stephen Labaton)
Washington, March 15.--Clinton Administration officials
last year rejected a recommendation by a senior regulator to
open a Treasury Department investigation into the failed
savings and loan association owned by President Clinton's
former partner in the Whitewater venture, Government and
Congressional officials said today.
The requests to open a broad investigation of the savings
institution was made by Brian McCormally, the top enforcement
official for the Midwestern division of the Office of Thrift
Supervision, which is part of the Treasury Department.
At the time another Federal agency, the Resolution Trust
Corporation, had already been investigating the institution,
the Madison Guaranty Savings and Loan Association.
The two agencies have overlapping jurisdictions and often
conduct separate investigations into failed savings
associations. But the thrift supervision office has a larger
staff and greater enforcement powers, and has handled many of
the most significant investigations of savings associations
and their lawyers and accounts.
new questions likely
The decision to reject the request for an investigation by
the thrift supervision office is likely to raise new
questions in Congressional hearings scheduled for next week
about whether officials in Washington tried to narrow
potentially embarrassing inquiries into Madison. Before if
failed, Madison had been owned by James B. McDougal, the
Clintons' business partner in the Whitewater Development
Company, a 200-acre real estate venture along the White River
in northern Arkansas.
Government officials and Congressional aides said the
request was turned down last fall by Mr. McCormally's
supervisors in Washington, Carolyn Lieberman, acting counsel
to the thrift supervision office, and Jonathan Fiechter,
acting director of the office. They report to senior
political appointees at the Treasury Department, and rarely
make major decisions without high-level consultations.
William E. Fulwider, the spokesman for the Office of Thrift
Supervision, declined to discuss the case or to say whether
its officials had consulted the Treasury Department.
Michelle Smith, a spokeswoman for the department, said:
``There was no involvement by Treasury. Treasury would only
be involved on policy matters, not specific cases.''
white house contacts
In the last three weeks the White House has found itself
engulfed in controversy as it struggled to defend meetings
between Treasury and White House officials seeking to discuss
the Resolution Trust Corporation's investigation into
Madison.
Those contacts are now being examined by an independent
counsel, Robert B. Fiske Jr., who is trying to determine
whether the trust corporation's investigation was improperly
impeded by Administration officials. Ultimately, the trust
corporation decided last fall to refer questions about
Madison to the Justice Department to investigate for possible
criminal violations.
Mr. Fiske has also been examining whether Madison
improperly funneled money into Whitewater or into Mr.
Clinton's re-election campaign in 1984, when he was Governor
of Arkansas.
As enforcement director for the Midwestern region of the
Office of Thrift Supervision, Mr. McCormally oversees
enforcement efforts against savings associations in 23
states, including Arkansas. He is best known as the Federal
regulator who supervised the inquiry into Neil Bush, a son of
former President George Bush, who settled charges of conflict
of interest over his role in the Silverado Banking, Savings
and Loan Association in Denver.
Reached in Chicago today, Mr. McCormally said he could not
comment about the Madison matter.
questions raised in 1992
Officials said that Republican appointees in the Treasury
Department initially instructed Mr. McCormally to look into
the Madison case after news reports about the savings
institution appeared in the 1992 Presidential campaign. But
the officials said it was not until last year, after the
Clinton Administration had taken office, that Mr. McCormally
believed he had enough information to warrant a request to
open a formal investigation.
Officials said Mr. McCormally asked his superiors in
Washington last fall for permission to look into the collapse
of Madison. It is unclear whether he made the request before
or after the meetings between Treasury and White House
officials concerning the Resolution Trust Corporation's
inquiry.
The Office of Thrift Supervision regulates the savings
industry, and the trust corporation handles savings
institutions that have been seized and bailed out by the
Government. The thrift supervision office, created in 1989,
also has many records from its predecessor agency, the
Federal Home Loan Bank Board, and officials said it had many
of Madison's files from the 1980's.
The House Banking Committee is scheduled to hold a hearing
next week that is supposed to be a semiannual review of the
trust corporation, but Republicans are hoping it will wind up
as a showcase for problems in the Madison case.
Republicans on the committee have asked regulators at the
trust corporation and the thrift supervision office for files
about their handling of the Madison case. But the chairman of
the committee, Representative Henry B. Gonzalez, recently
wrote to the heads of the two agencies ordering them not to
comply with the Republican request.
Mr. D'AMATO. I will not say any more with respect to this today,
because we have this important bill on the floor. I want to go forward
with the bill. I commend the staff on both sides, the majority staff,
as well as the chairman of the Banking Committee, for bringing us so
far as it relates to this particular legislation, which I hope we can
even pass today. I do not know of any big controversial matters or
reasons we should not act on this bill.
If Members have amendments, please come down and submit them to us so
that we can act on them accordingly and do the business of the people.
Mr. RIEGLE addressed the Chair.
The PRESIDING OFFICER. The Senator from Michigan.
Mr. RIEGLE. Let me make a comment or two. First of all, I appreciate
the strength of the feeling of the Senator from New York on all of the
issues he has addressed here today. I want to say that I appreciate the
fact that notwithstanding his concern about the issue he has just
talked about and made reference to with respect to the article in the
New York Times today, he feels that we should move ahead with this
legislation.
We have worked this out on a bipartisan basis, and it has a number of
elements which I have described--all important, all timely. I
appreciate the fact that he is prepared to move that forward, and also
the parts of it that represent the thinking he has contributed in terms
of small business loan securitization, among other things.
With respect to the other issues the Senator raises, in rereading the
story in today's New York Times, I fully would imagine that Robert
Fiske, whom I have met with and whom the Senator has met with, will
pursue any questions that arise which fall within the scope of his
efforts.
I do not purport to speak for him, but his charter certainly is drawn
in such a way.
Mr. D'AMATO. Mr. President, if my colleague will yield for an
observation--and I do not want to debate my colleague on this--but
there is a very fine distinction between the role of Congress as it
relates to the abuse of power, which may not constitute a criminal act
per se, but is absolutely unreasonable, unwarranted, and should not be
done.
The people have a right to know that. While Mr. Fiske will be looking
to see if there was criminal wrongdoing or perhaps questionable actions
relating to fraud on the civil side, et cetera, it is Congress'
responsibility to see to it that we do not have the kind of
interference and meddling which really gets into the abuse of power.
There is that fine line.
That, I think, is our prerogative. That is not something that can
wait indefinitely; a reasonable period of time, if he wants to speak to
Mr. McCormally, fine. If he wants to subpoena him, fine. But we have a
right to know, and the public has a right to know sooner, rather than
much later. That is the only point I make.
Mr. RIEGLE. Mr. President, let me address that, as well. As you know,
we had the hearing, now a couple of weeks ago, when the Treasury
officials were in. What I have done since that time is kept the
committee record open. I have kept it open precisely so that any other
questions that should be asked and answered, which fall within the
scope of our oversight, can be done. I have prepared a series of
questions myself to be sent to the Treasury Department, to fill out the
facts and the information I think we need to have as it relates to
questions that arose.
Because that committee record is open as of this moment, I think that
any people to whom the questions would be addressed are under an
obligation to respond accurately and fully, and I expect that they will
do so.
I think any question that you wish to raise on these points can
properly be submitted to them, and I will keep the record open in order
to get those responses. I think that falls within the scope of the way
our procedure works and how we get answers to questions that arise. So,
in any event, I think that also is an avenue that is available at this
moment that I suggest to the Senator.
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